Total Product (TP)
Definition
Total product (TP) represents the total quantity of output produced by all inputs during a specific period of time, such as labor, capital, and raw materials. It shows how much output is generated from using different levels of inputs.
Analogy
Think of baking cookies with your friends. The total number of cookies you bake together represents the total product. As each friend joins in, more cookies are produced until everyone's effort contributes to reaching the maximum number possible.
Related terms
Marginal Product (MP): Marginal product measures how much additional output is produced when one more unit of input is added while keeping other inputs constant.
Fixed Costs (FC): Fixed costs are expenses that do not change regardless of production levels, such as rent or insurance payments. They remain constant even if the total product increases.
Variable Costs (VC): Variable costs are expenses that change with the level of production, such as raw materials or labor. They increase as the total product increases.
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